Hosain Rahman is the mastermind behind Jawbone, which has given flair to product categories including the wireless speaker (Jambox) and the activity wristband (Up). Both men bring a strong design sensibility to their technological pursuits, and at this year’s South by Southwest Interactive festival, in Austin, we asked the two friends to discuss the art—and business—of merging design and consumer electronics.

Rahman: In 2001, when you guys launched the first iPod, it was not widely accepted that technology products needed a high level of design. It was a lot about "putting lipstick on a pig."

Fadell: Absolutely. If you think about how people purchased things in the '90s and early 2000s, it was, "What is the processor size? How much memory does it have?" Now people are like, "Does this cell phone fit in my hand?" They're not too worried about the processor; they're worried about their apps. They're worried about what they can do. Which is great. I just hope we don't go back to the discussion where everyone is worried about faster, bigger, better.

"Nest and Jawbone have gone into spaces where there are giant, established players," says Rahman. "You’re talking about companies such as Bose, which has been around since my grandfather’s time. And you [Fadell] with Honeywell." One advantage Rahman has over the com­­pe­tition is speed. "The efficiency with which we move and the speed at which we deliver is still faster than a lot of those big companies," he says.

[Illustration by Justin Mezzell]

Rahman: A lot of people now realize that success can come from products that are considered from a design perspective. But it's hard to do. It's expensive; it requires a certain DNA—a certain thinking, risk taking.

Fadell: You and I understand that because we've been doing it for more than a decade each. But when you think about all of the new projects popping up, you hear, "Oh, I can build this and that. I have this experience with a new piece of hardware." And we go, "Are you sure?" There are a lot of designers who think they understand technology and a lot of technology guys who think they understand design. But to put them together and make it robust and repeatable for the mass market? It's an art.

Rahman: You've got to go through the mistakes and the learning curve and all that stuff.

Fadell: And it's costly if you get it wrong.

Rahman: Everyone's gotten it wrong. Honestly. We just got it wrong on [the first iteration of] Up. Putting a full computer on the wrist was a lot more complicated than we realized. That's the important thing that people don't always remember: You have to give yourself space and time and the ability to iterate and figure things out. You've got to be able to prototype it, try it, and test it on lots of people to see what's going to catch.

Fadell: Especially when it's an all-new category. It takes 9 to 12 months to get the first design done. Then you use it and understand what you need to do to make it mass market. If I look at something like the iPhone, it took two to two-and-a-half years to actually bring it to market, even after all of the iPod success and knowledge. But to really make something great, it took multiple iterations.

Rahman: I think that's particularly the case in mobile applications. You have to have that really tight narrative around the problem you're solving. That becomes the judgment criteria for every decision, and you've got to keep whittling it down. Otherwise you can spin out of control.

Fadell: But then there's the packaging, the retail experience, the marketing messaging, and what you do on your website. All of those things are design elements, and they take a long time to get right.

Rahman: If you miss any one step, the whole thing falls apart. It's a lot more than marketing videos on Kickstarter.

Fadell: If you look at a project on Indiegogo, what's nice about that is they're able to test-market demand. They can go out and raise capital because they have individuals willing to buy that product. They see that people care, and they can take it to professional investors who can help them scale it to the next level.

Rahman: I remember this crazy conversation you and I had maybe six years ago, where you were talking about a Nokia guy chasing you down to see the prototype of the iPhone. You said, "This is amazing. I've got just 500 guys who built this phone, but Nokia sells 500 million devices a year. Why is he trying to chase me down?" Now we're sitting here in 2013, and the amount of change that's happened is incredible.

Fadell: BlackBerry, Nokia, Sony—if you want to disrupt large companies, you can get in the space and make a lot of change. Wearables, such as Up, are now mainstream. I hope we do the same thing with Nest. You can disrupt big companies if you're fast, experienced, and thoughtful about what you do. Customers will respond. Maybe not the customers who are used to buying the old stuff from the old companies. But the new customers who have this smartphone love, the ones who appreciate what they're looking for in every product. If you can bring that to the space, whatever the space, it will resonate with people.